A train loaded with Powder River Basin coal approaches the Laramie River Power Station power plant in eastern Wyoming. Two western coal mining projects were pulled back recently amid global downward pressure on coal markets. (Dustin Bleizeffer/WyoFile)

— Originally published March 9, 2015, by Environment & Energy Daily. Contact E&E for permission to republish.

At least two coal mining companies have scrapped major Western mining plans in recent weeks in the face of global market troubles.

The industry has for years been laying off workers and idling operations in hard-hit central Appalachia, but such moves have been less common in the West.

Lexington, Ky.-based Rhino Resource Partners LP announced last week that it was giving up on the proposed Red Cliff mine in western Colorado, citing permitting delays and weak market conditions.

Rhino said it had been working with the Bureau of Land Management on an environmental impact statement since 2005 but decided to suspend it late last year. It then decided to call the whole mine off.

The company blamed “lack of progress in getting the EIS finalized, the amount of money spent on the project to date, the impending higher costs to be incurred on the next phase of the EIS report and the desire to limit capital spending on certain projects due to the ongoing weakness in the coal markets.”

The company said it would sell or abandon coal or land reserves and was writing off some assets because of “lack of marketability.”

Rhino, which reported a $61 million net loss for the fourth quarter of 2014, said it had written off more than $22 million connected to Red Cliff as of Dec. 31.

Rhino was also asking BLM to lease the company more than 14,000 acres of federal coal reserves near its Red Cliff holdings. The company has not responded to questions on whether it continues to pursue the tract. A BLM spokeswoman said the review was on hold.

Beyond Red Cliff, Rhino said the “prolonged weakness in the U.S. coal markets” led the company to conduct a comprehensive review of its operations. Also pointing to troubles in central Appalachia, the company said it wrote off a total of $45.3 million last year.

In 2013, Oxbow Corp., a large energy company run by William Koch, announced it was idling the Elk Creek mine in western Colorado. It was one of the country’s largest underground coal producers.

Similarly, Arch Coal Inc. last year quietly asked BLM to withdraw a request to lease almost 6,000 acres containing 957 million tons of federal coal reserves in the Powder River Basin. The agency closed out the so-called West Jacobs Ranch tract lease application in January.

Arch acquired the BLM lease request when it bought Rio Tinto PLC’s Jacobs Ranch mine back in 2009. Arch then merged the property with its Black Thunder mine in northwestern Wyoming, one of the largest in the world.

“The decision to withdraw the application was made after careful evaluation of our near-term needs and commitment to a prudent capital allocation strategy,” said Arch spokeswoman Logan Bonacorsi. The company reported a $240 million fourth-quarter net loss.

The mining industry was looking to exports as a way to deal with declining coal use domestically. But analysts report a global glut of coal for both power plants and steel production.

Shannon Anderson, an organizer for the Powder River Basin Resource Council, said of the developments, “I would say this reinforces that coal markets are going to be down for the long term.”

Anderson took aim at the current lease-by-application process, in which a company asks the Interior Department’s BLM to offer a tract for competitive bidding rather than the agency taking the lead.

Environmental groups have tried unsuccessfully for years to push the agency into recertifying the Powder River Basin as a coal-producing region. But the Obama administration has called the current process more efficient.

“As far as the BLM lease, it also signals that BLM’s policies of responding to coal companies versus considering on their own when to lease is not in the public’s best interests,” Anderson said. “Interior is at the mercy of the companies, which is not a viable way to conduct government business.”

Other leases are moving forward. Arch, for example, is still requesting a 2,000-acre lease modification for its West Elk mine in Colorado. And last week, BLM in that state announced another proposed lease modification for Peabody Energy Corp.’s Foidel Creek mine, which would allow the company to access an additional 340,000 tons of federal coal.

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